MORTGAGE INFORMATION FOR FIRST TIME BUYERS

Before you take the big step of buying your first home, consider the following.

The first rule about applying for a mortgage is simple: the bigger your down payment is, the lower your monthly payments will be, and the less interest you will pay during the life of your mortgage. Also, if you make a down payment of 20 percent or more, you’ll avoid paying private mortgage insurance (PMI), a premium added to protect the lender in the case of mortgages that are considered higher risk.

Your mortgage is likely to be your single biggest expense. Some say you shouldn’t spend more than two-and-a-half times your yearly income. Others will say that no more than 35 percent of your monthly income should go to living expenses, including your mortgage and utilities. Just make sure you create a budget that will enable you to meet all of your financial responsibilities.

Before you go house hunting, have a lender pre-approve you for a mortgage. The lender will ask you questions about your income and expenses and help you determine a borrowing level that is comfortable for you. This will enable you to save time by only looking at homes within your price range. You will also be in a position to make an offer on a home that won’t have to be conditional upon obtaining financing.

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